5/06/2010 @ 12:20PM

Wal-Mart, Patagonia Team To Green Business

Wal-Mart, the Bentonville, Ark. retailing behemoth, and Patagonia, the do-no-evil outdoor-apparel company in Ventura, Calif., are strange bedfellows.
Wal-Mart
is 1,300 times as big. Wal-Mart sells $10 jeans; Patagonia sells $95 jeans. When Wal-Mart gets attention for its personnel policies, the story has to do with discrimination or inadequate health insurance. Yvon Chouinard, Patagonia’s founder and chief executive, gets written up for letting his employees go surfing when the waves are up. Wal-Mart is not thought of as a green company; Patagonia practically invented the term 25 years ago by donating 1% of sales to environmental causes.

And yet the two have formed an alliance. Over the last two years Patagonia has shared its knowledge about greening its supply chain with Wal-Mart–for free. It is also working with Wal-Mart to develop a sustainability index for its products: Within a few years Wal-Mart wants to place a scorecard on its store goods, rating products on eco-friendliness and social impact. The first step Wal-Mart has taken is to evaluate its suppliers. It will give preference to those who best comply.

Patagonia has assisted Wal-Mart mainly on the clothing side, helping Wal-Mart buyers figure out things like how much water is consumed in the manufacture of garments and whether pesticides are used. The Patagonians helped Wal-Mart come up with questions regarding things like climate, energy and efficiency that the company will use to evaluate its suppliers.

The partnership began a little over a year ago when Chouinard was asked by then Wal-Mart head Lee Scott to give a presentation to 1,200 of his buyers on vetting suppliers for sustainable practices. Chouinard, 71, initially didn’t take the invitation very seriously. But when Wal-Mart sent a private plane to pick him up in Jackson, Wyo. and fly him to Bentonville, he says, “I started to get an idea of what a big deal this was.”

The conference was simulcast to Wal-Mart offices around the world. Scott spoke first, detailing his company’s plan to evaluate the eco-friendliness of its suppliers. Then he introduced Chouinard, who spoke about how far a company had to go in order to be truly green. “I talked about those little led [light-emitting diode] lights that seem to use so little energy,” says Chouinard. “But I told them when you really start looking into these lights you realize that they take 19 plants in California to power them.” Suddenly one of the buyers stood up in the audience and yelled, “We’re going to get rid of those!” The rest of the crowd stood and applauded. “They are true believers in the brand,” laughs Chouinard.

Patagonia has a history of sharing eco-friendly information. When the company began using organic cotton in the 1990s its buyers gave advice to
Nike
and
the Gap
about how to do the same. This year Patagonia began collaborating with competitors REI and North Face. The three outdoor-clothing vendors agreed to use Bluesign Technologies, a Swiss firm, to grade dyeing and finishing by textile suppliers.

“This is where altruism meets selfishness,” says Jill Dumain, Patagonia’s environmental-strategy director. “We’re not big enough to make this the industry standard on our own. We need them to do it, too.” Patagonia has recently met with executives from Ikea and the British retailer
Marks & Spencer
about sustainability.

Other companies have jumped on the idea of open-sourcing green information. In January Nike announced the formation of GreenXchange, a consortium of ten companies (among them,
Yahoo
) that will trade eco-friendly intellectual property.

For Wal-Mart working with Patagonia is the next step in the path first outlined by Scott in 2005, when he announced that the company “must operate in a world that is healthy.” There remain plenty of skeptics. Chouinard believes Wal-Mart has two motives. The first: Wal-Mart has seen other retailers falter after a generation or two and wants to avoid that fate by evolving. The second: “They want to do this before the government makes them do some wishy-washy standards.”

Count Chouinard as pleased with Wal-Mart’s initiatives. “I always thought the revolution would start at the bottom,” he says. “It’s starting at the top.”